Renewable diesel manufacturers usage at 77%, highest because July - AEGIS
Biodiesel manufacturers utilization rate struck 89% in Oct, greatest considering that June 2023
Better credit rates, more powerful diesel demand spurred higher activity - expert
NEW YORK, Jan 3 (Reuters) - U.S. eco-friendly diesel and biodiesel producers ramped up operations in October to multi-month highs, helped by stronger margins for the biofuels, according to data put together by advisory group AEGIS Hedging.
Renewable diesel manufacturers utilized 77% of their overall operable capacity in October, the greatest given that July 2024, the information revealed. Biodiesel plant usage rose to 89%, the greatest because June 2023.
Rising utilization rates and enhancing margins are a welcome relief for the biofuels market, after operators sustained a rough start to 2024 as need development slowed, leaving the market oversupplied and requiring a number of biodiesel plant closures.
Both eco-friendly diesel and biodiesel are more expensive to produce than diesel, making suppliers based on government rewards such as tax credits. Among the 2, sustainable diesel has emerged as the favored fuel for suppliers, as it gains better incentives and can substitute diesel completely.
Total biodiesel production capacity fell 4.2% year-over-year to about 2 billion gallons in October, according to information released by the U.S. Energy Information Administration on Tuesday.
Renewable diesel output capability increased nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as the majority of new biofuel plants opened in the previous three years were geared towards it.
Still, oversupply pushed renewable diesel output capacity 6% lower in October from a record 4.90 billion gallons in June.
In addition to plant closures, success for the industry in October was increased primarily by a surge in the worth of credits needed for compliance with federal biofuel mandates, said Zander Capozzola, of renewable fuels at AEGIS.
D4 Renewable Identification Numbers, released for biodiesel and eco-friendly diesel production, increased from a low of 56 cents each in September to over 71 cents in October, enhancing success for making the fuels, Capozzola stated.
Margins were also assisted by stronger demand for diesel, which struck an one-year high in October, raising rates for both the traditional fuel and its alternatives, he stated.
Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., also rose from below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.
"You truly had whatever rowing in the ideal direction in October," Capozzola said. (Reporting by Shariq Khan in New York City
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US Biofuel Producers Increase in Oct As Profitability Improved,
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